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ford motor company (New York Stock Exchange: F) If the stock price had not recovered in the last month of this year, the stock would have ended 2023 in the red. Ford stock rose 18.8% in December as investors bet on the company’s future boom amid expectations of lower interest rates, according to S&P Global Market Intelligence data.
Ford’s 2023 outlook is less worrying
Ford’s sales of internal combustion vehicles, including trucks, decreased by about 800 vehicles in November compared to the same month last year as the company deals with production stagnation due to a long labor strike. Labor contracts with the United Auto Workers (UAW) have been a recurring hurdle for automakers, but 2023 was especially difficult. Ford suffered the first UAW work stoppage in nearly 50 years, severely disrupting production and sales and hurting profits. Ford also withdrew its 2023 forecast in October last year amid the strike.
Ford finally reached a new agreement with the UAW and released its updated outlook for this year on November 30th. Despite the heavy strain on the company, investors breathed a sigh of relief as Ford’s 2023 performance and 2024 plans become clearer.
Ford expects the new labor contract to cost $8.8 billion over the course of the contract, which runs through April 2028. That equates to about $900 per vehicle, a cost Ford expects to offset through lower expenses and increased productivity. Ford now expects adjusted earnings before interest and taxes (EBIT) to be between $10 billion and $10.5 billion in 2023, down from its previous outlook of $11 billion to $12 billion. .
But when you compare Ford’s latest 2023 outlook to its actual 2022 adjusted EBIT of $10.4 billion, this is evidence of the company’s resilience. Demand for Ford vehicles remains strong, as the latest sales figures for 2023 show.
Ford’s U.S. sales rose 7.1% in 2023 to nearly 2 million vehicles. The Ford F-Series has been the best-selling truck in the United States for 47 consecutive years, but Ford’s F-150 Lightning and F-150 Hybrid have emerged as the best-selling trucks. Ford sold a record number of electric vehicles (EVs) in 2023, including the company’s F-150 Lightning pickup truck, Mustang Mach-E, and E-Transit van. F-150 Lightning sales increased by 55% compared to 2022.
Ford could face some challenges in 2024
Ford CEO Jim Farley is optimistic about 2024, saying the company will see “new versions of its most popular trucks and SUVs arrive this year, with the new Super Duty and Mustang coming in a full year.” “This is a big year for Ford.” Lincoln. ”
Unfortunately, EVs, a growth engine for automakers, could be a challenge in 2024 as the industry faces a slowdown amid rising interest rates and low subsidies. Ford reportedly plans to cut production of its F-150 Lightning pickup truck in half this year. Ford’s EV business is losing money and burning through cash quickly, so any drop in demand and sales at this point would be bad for the company.
But with Ford’s stock price down nearly 12% through November 2023 and its yield above 5%, investors saw an opportunity to buy the stock before the new year, especially in anticipation of lower interest rates this year.
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Neha Chamaria has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
The original article on Why Ford stock soared 19% in December was published by The Motley Fool.
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